Pakistan once again created history with over $2 billion worth of workers’ remittances for the sixth consecutive month in November, which helped the country to continue to meet its international payment obligations.
“More good news for Pakistan’s economy as workers’ remittances continued to grow in November - remaining above $2 billion for a record sixth consecutive month,” said Prime Minister Imran Khan in a tweet on Friday.
“According to the SBP, they rose to $2.34 billion, up 2.4% over the previous month and 28.4% over November 2019.”
Cumulatively, in the first five months (July-November) of current fiscal year, remittances grew 27% to $11.77 billion compared to the same period of last year, revealed figures released by the central bank on Friday.
The State Bank of Pakistan (SBP) said persistent efforts by the government and central bank to bring remittances under the Pakistan Remittance Initiative (PRI) and rising use of digital channels amid limited cross-border travel were some of the important factors behind the sustained improvement in workers’ remittances.
In a statement, the SBP pointed out that orderly exchange market conditions and improvement in global economic activity lent further support to the increase in remittances.
Taurus Securities Head of Research Mustafa Mustansir said that the growth in remittances came because Pakistanis, who had lost their jobs abroad, were transferring their savings ahead of their return home amid the Covid-19 pandemic.
The situation would normalise in the second half (JanuaryJune) of current fiscal year 2020-21, meaning that the spell of layoffs would come to an end and remittances would slow down during that period, he said. “Cumulatively, workers’ remittances are estimated to grow 6.5% to $24.6 billion in FY21 (compared to $23.1 billion in FY20),” he said.
His brokerage house projection is more optimistic compared to the central bank’s anticipation in its Annual Report for 201920, which saw remittances in the range of $22-23 billion in FY21. Remittances are one of the two major sources of foreign income for the country.
The growth in remittances has offset the impact of stagnant export earnings so far in the current fiscal year as the country utilises the inflows to make import payments and foreign debt repayments. On average, the workers’ remittances have been about half a billion dollars ($499 million) higher per month in FY21 compared to the same period of previous year.
Earlier, Pakistan had received remittances in the range of $1.78-1.9 billion per month in the prior five months - JanuaryMay 2020, according to the central bank.
The SBP said in its annual report that the government had taken a number of initiatives to ramp up remittances through official channels and crack down on the illegal Hundi/ Hawala operators.
The initiatives included “extension in the scheme for reimbursement of TT (telegraphic transfer) charges to small remitters by reducing the transaction threshold from $200 to $100, broadening scope of the incentive scheme for financial institutions and taking a large number of technology-based money transfer companies on board.”
Country-wise remittances Pakistanis sent 25% higher remittances from Saudi Arabia, which stood at $615.1 million in November 2020 compared to $490.8 million in the same month of last year. Non-resident Pakistanis dispatched 13% higher remittances at $519.5 million from the UAE in the month under review compared to $459.8 million in the corresponding month of previous year.
They sent $286.3 million from the United Kingdom, a growth of 46% compared to $196.6 million remitted in November 2019. Remittances from the US rose 42% to $185.2 million last month compared to $130.9 million in the corresponding period of previous year.
Overseas Pakistanis remitted $281.4 million from other Gulf Cooperation Council (GCC) counties compared to $242.9 million last year. Pakistanis living in EU countries sent $219.3 million compared to $141.2 million last year. They sent $231.7 million from other countries including Malaysia, Norway, Switzerland, Australia, Canada and Japan in November compared to $159.2 million in November 2019.